Covid

THE PURPOSE OF INSURANCE IS TO HELP BUSINESSES AND COMMUNITIES MANAGE THE RISKS THEY FACE, ENABLE THEM TO RECOVER QUICKLY FROM DISASTERS BY PAYING CLAIMS, AND PROVIDE THE SECURITY THAT ALLOWS THEM TO INNOVATE, DEVELOP AND DRIVE ECONOMIC GROWTH.

would provide reinsurance for commercial non-damage business interruption cover for black swan events through industry pooled capital, backed by a government guarantee to pay out if ever the pool had insufficient funds.

Alongside developing and sharing these frameworks, Lloyd’s is developing a Centre of Excellence to build resource and capability to better understand, model and create products that better protect customers against systemic risks, including pandemics. This will include new technical capabilities and services to support insurers, and academic partnerships to develop a better understanding of systemic risks and customers' emerging needs from the insurance industry.

To kickstart the creation of the Centre of Excellence, Lloyd’s Innovation Lab is already working with insurtechs that can provide some of these capabilities, including exploring the application of an epidemic tracker to better evaluate and underwrite pandemic risk, as well as solutions to help close the insurance gap for systemic risks. In parallel, Lloyd’s Product Innovation Facility is focusing on innovating products to respond to an accelerated shift towards intangible-driven business models in response to Covid-19.

“The purpose of insurance is to help businesses and communities manage the risks they face, enable them to recover quickly from disasters by paying claims, and provide the security that allows them to innovate, develop and drive economic growth,” Lloyd’s chairman Bruce CarnegieBrown said.

“Covid-19 has demonstrated that there is much more we can do to support our customers by providing protection for the changing risks they face. Some of these risks are of a scale that require partnership with governments globally, and this report identifies ways in which the insurance industry could work with governments to share risk and create a braver, more resilient world.”

Lloyd’s confirmed in May that the market will pay out in the range of US$3 billion to US$4.3 billion to its global customers as a result of the far-reaching impacts of Covid-19. In addition to managing wide-ranging pay outs across sectors and geographies, the experts, entrepreneurs and innovators drawn together by the Lloyd’s market have already started creating new policies to support the immediate health response as well as the longer-term exit strategy. This includes the search for diagnostics, treatments and vaccinations, where one Lloyd’s syndicate is insuring more than 100 individual clinical trials taking place around the world investigating all stages of Covid-19. Lloyd’s is also actively working on an insurance solution to support the safe transportation of a Covid-19 vaccine (when developed) to emerging markets.